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Microsoft's (MSFT) Nuance Communications Deal Hits Roadblock

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Microsoft’s (MSFT - Free Report) acquisition of Nuance Communications is facing deep scrutiny by Britain's antitrust regulatory authority — Competition and Markets Authority or CMA — per a report from Reuters. There has been no official word on the matter from either of the parties.

Citing sources familiar with the matter, Reuters further added that Microsoft has been conducting preliminary talks with CMA prior to floating the formal approval request for the Nuance buyout.

In April 2021, Microsoft had announced its intent to acquire Nuance for $19.7 billion (including Nuance’s net debt) in an all-cash deal.

According to Reuters, CMA will be looking into the deal to ascertain whether the deal would result in lessening of competition in the U.K. tech space. Last week, Reuters noted that Microsoft-Nuance was set to be cleared by the EU antitrust regulatory body in another report.

 

Nuance’s proposed acquisition by Microsoft has already received approvals from the U.S. Department of Justice (June 2021) and the Australian Competition Commission (October 2021), per Reuters.

The buyout of Nuance is anticipated to boost Microsoft’s total addressable market in the healthcare vertical to $500 billion, noted the software giant. Microsoft stated that Nuance solutions are leveraged by nearly 77% of hospitals as well as used by more than 55% of physicians and 75% of radiologists in the United States.

Nuance offers pioneering conversational Artificial Intelligence (AI) tools to bolster business productivity. The company’s healthcare delivery offerings like Nuance electronic health record (EHR) services, Dragon Ambient eXperience (DAX), Dragon Medical Virtual Assistant, Dragon Medical One are expected to witness continued momentum amid the ongoing pandemic.

In the last reported quarter, Nuance reported non-GAAP revenues of $333.1 million, up 8.3% on a year-over-year basis driven by strength in the Dragon Medical and DAX offerings. Non-GAAP earnings per share came in at 9 cents, down 35.7% year over year.

Zacks Rank & Stocks to Consider

At present, Microsoft currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader tech sector include Cirrus Logic (CRUS - Free Report) and MaxLinear (MXL - Free Report) . The stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

For Cirrus Logic, the Zacks Consensus Estimate for fiscal 2022 earnings is pegged at $5.37 per share, up 7.6% in the past 60 days. The long-term earnings growth rate of the company is pegged at 9.3%.

Cirrus Logics’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 14.9%. Shares of the company have rallied 11.7% year to date.

For MaxLinear, the Zacks Consensus Estimate for 2021 earnings is pegged at $2.68 per share, up 9.8% in the past 60 days. The long-term earnings growth rate of the company is pegged at 20%.

MaxLinear’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 8.7%. Shares of the company have rallied 96% year to date.


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